Global Economics

Europeans Protest Against Austerity Wave

The wave of government belt-tightening from Spain to Germany is being met with strikes and protests by workers, but economists welcome the budget cuts

Public sector workers in Spain protested on June 8 and more demonstrations are pending around Europe in upcoming days over steep budget cuts

Spanish public sector workers took to the streets on Tuesday (8 June) to protest against government announced pay cuts, while German trade unions called for mass demonstrations this coming weekend after Berlin unveiled its own four-year austerity package earlier this week.

The wave of government belt-tightening sweeping across Europe has already resulted in strikes in countries stretching from Ireland to Greece this year, with Brussels also seeing protests yesterday, although reports suggest turnout in Spain was below organisers' expectations.

Crowds gathered in Barcelona, Madrid, Valencia and elsewhere in the southern European state to show their discontent at the Socialist government's plans to shave €15 billion off the country's deficit over two years.

The measures include a five percent pay cut for public sector workers, the suspension of automatic inflation-adjustments for pensions, the scrapping of payouts to parents for the birth of children, and a reduction of €1.2 billion in regional funding.

Protestors accused the government of mismanaging the crisis, and said the planned measures would disproportionately affect public sector workers. "We are not responsible for this crisis," read one banner. "We're not the ones who'll pay for it."

Spanish unions said 75-80 percent of public sector workers had joined the day-long strike, although the labour ministry put the figure at 16 percent, with public transport largely unaffected. Roughly 2.5 million Spaniards work in the public sector.

More strike action may follow however, with Madrid set to announce unpopular labour market reforms on Wednesday that will make it easier for employers to hire and fire workers.

The government is under intense pressure from financial markets and Brussels to turn its economy around after a recent credit rating downgrade dramatically increased the country's borrowing costs.

Like Ireland, Spain's property market imploded when the global financial crisis struck, plunging the country into an almost two-year recession and placing a huge strain on government coffers. Unemployment is currently hovering around the 20 percent mark, the highest in the eurozone.

Germany

In Germany the first labour protests at the government's €80 billion austerity package were announced by the Verdi public sector workers' union, with mass rallies planned in Berlin and Stuttgart on Saturday.

Its leader Frank Bsirske said the brunt of savings would fall on public sector workers and the unemployed, while the wealthy would continue to live in a "tax oasis."

Other unions later joined the call to arms, while German industry and economists have largely welcomed the proposals due to their focus on spending cuts rather than broad-brush tax rises.

Announced on Monday, Chancellor Angela Merkel's list of austerity measures is intended to show that Europe's largest economy will lead by example. The largest part of the cuts in the four-year programme will fall on welfare payments and benefits for the long-term unemployed.

A lower proportion will affect banks and other businesses, with the government intending to introduce a financial transactions tax and a new tax on flights leaving Germany.

Britain, the Republic of Ireland, Portugal, and Italy are amongst the countries to have unveiled austerity measures as governments feel the squeeze.

The announcement by the Romanian government that it plans a 25 percent cut in public sector salaries and 15 percent reduction in pensions has also seen people take to the streets in the east European country this week.